Yes. Every year during the tax season, there are always small and medium-sized business owners asking if they can file a “zero declaration” and avoid having to file an audit and tax return if their company did not operate any business during the fiscal year.

According to the Hong Kong Companies Ordinance, all limited companies registered and operating in Hong Kong are required to submit their company accounting records to auditors before filing tax returns every fiscal year. However, if the company has applied to become a “dormant company” in accordance with the statutory procedures, it can apply to the Inland Revenue Department for exemption from accounting, auditing and tax payment and make a “zero declaration”.

In Hong Kong, a limited company must follow a series of procedures before filing tax returns, especially those involving the audit of financial statements and the filling of tax forms. Although these steps may seem straightforward, their actual implementation requires expertise and experience.

Firstly, under Hong Kong law, all limited companies must submit their financial statements to auditors for audit before filing their profits tax returns. This step ensures the accuracy of the report and compliance with Hong Kong accounting standards and is an important part of the tax filing process.

Secondly, although technically companies can fill out their own profit tax returns, this involves cumbersome tax regulations and calculation methods. For those who have not received relevant training or lack tax knowledge, filling out these forms is not an easy task. Incorrect reporting may result in further inquiries from the tax bureau or even fines.

In addition, if the company does not appoint a tax representative, it cannot apply for an extension of time to file its tax returns. These arrangements allow companies to defer filing tax documents under certain conditions, helping to manage tax pressures in certain situations. Because of this, the vast majority (close to 99%) of limited companies choose to appoint professional tax representatives to handle tax filings and related matters.

If it is not a dormant company or does not meet the zero declaration requirements, a general limited company is required to prepare accounts and file taxes every year. According to Hong Kong’s tax system, profits tax is only levied on profits generated from operations in Hong Kong. Except for property rental, any form of business carried on in Hong Kong is required to report profits tax.

For unlimited companies (sole proprietorships that only register for business), the tax return can be attached to the personal tax return of the company owner, and there is no need to file a separate return. For limited companies, the tax department will generally issue a tax return form about 18 months after the company is established. The company must audit its finances and fill out an independent profit tax return form and submit it to the tax department. The following is the audit and tax filing process for a limited company.